Source:

CambridgeIGCSEBusinessStudies,4thedition,KarenBorrington&Peter
Stimpson


Source:
CambridgeIGCSEBusinessStudies,4thedition,KarenBorrington&Peter
Stimpson

Howcustomersgettoknowabouttheproductthroughpromotionis
important,buttheymustalsobeabletobuytheproductseasily.

DistributionChannels
Thisreferaproductispassedfromtheplaceofproductiontothe
customerorretailer.

TheMainDistributionChannels

DistributionChannel1
ProducerConsumer

Advantages

Disadvantages

Simpledistributionchannel

Consumermaynotlivenear
tothefactory

Suitableforagricultural
products

Thisisnotsuitableforhuge
products,unabletosentby
post

Lowerpriceifselldirectlyto
customers

Maybeexpensivetosend
productsbypost

Productssolddirectlyby
mailorder/internet


Source:
CambridgeIGCSEBusinessStudies,4thedition,KarenBorrington&Peter
Stimpson

DistributionChannel2
ProducerRetailerConsumer

Advantages

Disadvantages

Producersellslarge
quantitiestoretailers

Nodirectcontactwith
customers

Cheaperdistributioncosts
comparedtodistribution
channel1

DistributionChannel3
ProducerWholesalerRetailerConsumer

Advantages

Disadvantages

Retailersavesstoragecosts

Nodirectcontactwith
customers

Retailercanpurchase
productsinsmallquantities
fromwholesaler

Maybeexpensiveforretailer
buyfromwholesaler

Retailercangivecreditto
customers

Wholesalermaynothavefull
rangeofgoodstosell

Wholesalermaydeliver
goodstoretailer

Takeslongerforfresh
productstoreachtoretailer

Wholesalermaygiveadvice
toretaileraboutwhatgoods
issellingwell

Wholesalermaylocatedfar
awayfromretailer


Source:
CambridgeIGCSEBusinessStudies,4thedition,KarenBorrington&Peter
Stimpson

DistributionChannel4
ProducerAgentWholesalerRetailerConsumer

Advantages

Disadvantages

Producermaynotknowthe
bestwaytoselltheproduct
inothermarket

Lesscontroloverthewaythe
productssoldtocustomers

Agentsawareoflocal
culturesandconsumer
behaviors

MethodsofDistribution
Departmentstores
Chainstores
Discountstores
Superstores
Supermarkets
Directsales
Mailorder
Internet/ecommerce


Source:
CambridgeIGCSEBusinessStudies,4thedition,KarenBorrington&Peter
Stimpson

ecommerce

Thisrefertobuyingandsellingofgoodsandservicesusingcomputer
systemslinkedtoInternet.

BENEFITSofecommerceto
BUSINESS

Websitecanbeusedtopromotethecompanyandproducts.
Orderscanbetakenfromonlineordering.
Consumersmaybeinterestedtopurchasemoreproductsdue
toattractiveandeasytofollowlinksfromInternet.
Businessescanmakeonlinepurchasesofsuppliesfromother
businesses.

OPPORTUNITIESofecommerceto
CUSTOMERS

Doonlineshoppingathome.
EasilytocomparepricesandproductsfromtheInternet.
Paymentbycreditordebitcard.
Customerscanpurchasegoodsfromabroad.
Customerscanpurchaseproductsforlowprices.

THREATS
ofecommerceto
BUSINESS

Highcompetitionwithotheronlinecompanies.
Websitedesignsmaybeexpensive.
Transportcostsmaybehigher.
Nofacetofacecontactwithcustomers.
Therewillbereturnedofgoodsfromcustomerabroaddueto
satisfactionservice.
Largewarehousemaybeneededtokeeptheinventories.


Source:
CambridgeIGCSEBusinessStudies,4thedition,KarenBorrington&Peter
Stimpson

Thisisnotsuitabletosellserviceswhichneedfacetofaceto
customers.

THREATS
ofecommerceto
CUSTOMERS

CustomersneedtoaccesstotheInternet.
CustomersmaynotbeabletoaccesstoInternetifcomputer
systemfailures.
Productscannotbeseen,touchedortried.
Thereisnofacetofacewiththesalesperson.
Securityregardingonlinepayment.

FactorsAffectingDistributionChannels

1. Whattypeofproductisit?

2. Istheproductverytechnical?

3. Howoftenistheproductpurchased?

4. Howexpensiveistheproduct?

5. Howperishableistheproduct?

6. Wherearethecustomerslocated?

7. Wheredothecompetitorsselltheirproducts?